Decentralisation and Local Development: What’s next?

12 Dec 2013

It has been over a decade now since the country first embarked on major decentralization reforms. These ongoing reforms have significantly enhanced local democratic governance and have proven key drivers of economic growth.

Greater responsibilities mean greater challenges, however, and many smaller rural municipalities have struggled to fulfil their new obligations.

UNDP has supported the decentralization process from the very start, working closely with local and national partners to help build up the capacities of local government institutions to overcome these challenges.

A vast amount of experience has been gained by all the stakeholders involved in this complex process. Innovative solutions have been explored in many areas—including the introduction of inter-municipal cooperation as a means of addressing the substantial disparities between the capacities of different local governments—and many important lessons have been learnt along the way.

Now a major review of decentralization has been undertaken to reflect on this experience.

With assistance from UNDP, research was conducted in all municipalities to identify the main achievements of decentralization and the main challenges that lie ahead. Carried out from September to November 2013, the research involved extensive surveys of local state administration bodies and local government units, as well as interviews with mayors and round table discussions with relevant stakeholders.

The key findings of this research were presented at a conference held today. This event, organized with UNDP support by the Ministry of Local Self-Government and the Association of Local Self Governments, brought together over 200 representatives from various ministries, state agencies, academia, NGOs and international organizations. Reflecting the importance of decentralization to the country’s process of accession to the EU, the conference was entitled ‘Decentralisation and Local Development in the EU membership Perspective’.

Introducing the research findings at the opening of the conference, UNDP’s Deputy Resident Representative Alessandro Fracassetti emphasised that “Over the past 10 years, local governments have been under great pressure to adapt to the complex decentralization reforms. The latest research shows that significant progress has been achieved in areas such as the legal and institutional framework for transfer of powers and resources, but many municipalities still struggle when it comes to improving the quality, efficiency and inclusiveness of public services.”

The findings relate to five main areas of decentralization: the legal and institutional framework for the transfer of powers and resources; fiscal decentralization; local service delivery; the development of the administrative capacity of local self-government units; and local democratic practice and citizen participation in decision-making.

The Legal and Institutional Framework for the Transfer of Powers and Resources
The research shows that significant progress has been made in simplifying procedures for the legalization of illegally built structures, including buildings for agricultural purposes on farmland. The adoption of a new Law on Concessions and Public-Private Partnership has also helped to speed up this process of legalisation. However, challenges still remain due to complex legislation in the area of environmental protection and unclear provisions on municipal liability for damages from natural disasters.

Fiscal Decentralization
Total revenues of local government increased by 12 per cent from 2011 to 2012. Higher revenues were realized in 70 municipalities through a 9.4% increase in grants and the share of local government in VAT increased to 4% in 2012, while the share of the local revenues in GDP increased to 6.36% compared to 5,78% in 2011.

However, major challenges remain with regard to insufficient funds for education in block grants for heating and student transportation costs, the lack of a fully functional system of fiscal equalization, and the growing number of municipalities with blocked accounts.

Local Service Delivery
The research found that municipalities are satisfied with the cooperation between municipal councils, mayors and municipal administration. Inter-municipal cooperation has been established in 85% of the 53 municipal councils surveyed. A significant number of new school buildings have been constructed and many existing school buildings have been renovated. Substantial investments in social welfare and the protection of children and elderly people have been realized in 12 of the municipalities surveyed. Five new technological and industrial development zones have been established.

The main challenges that remain in the area of local service delivery are related to problems with drinking water, which affect some 13 of the municipalities surveyed. Some thirty per cent of the surveyed municipalities do not deliver appropriate services for the collection and management of municipal waste. Only half of the surveyed municipalities provide full sanitation coverage. Only half half of the municipalities provide organized local passenger transport. And two-thirds of the municipalities are not implementing measures to encourage energy efficiency at local level.

The Development of the Administrative Capacity of Local Self-Government Units

A series of training events have been held to build the capacities of municipal councillors, including training in gender equality, equal opportunities and non-discrimination, the prevention of human trafficking, and community relations.

The main challenges that remain concern the lack of adequate professional staff in rural municipalities. The issuing of B integrated environmental permits is the biggest single challenge, while additional training is needed in areas such as support for entrepreneurship, competitiveness and innovation, financial management, the preparation of urban planning documentation in rural areas, the electronic issuance of building permits, the promotion of rural tourism and the implementation of the Law on Waters.

Local Democratic Practice and Citizen Participation in Decision-making

The findings of the survey show a welcome increase in the number of civil initiatives submitted. All of the municipalities surveyed meet their legal obligation for holding open sessions of the council. 

More than half of the 55 surveyed municipalities have developed institutional mechanisms for direct consultation with citizens. And most municipalities organize meetings with citizens through their urban and local communities.There remains a clear need, however for an increased use of innovative mechanisms for direct citizen participation in decision-making on issues of local importance. A proactive approach further requires initiatives to strengthen social cohesion.

The participants at the conference were unanimous in agreeing that more work still needs to be done to build local capacities for implementing decentralized competencies in a more efficient manner. And capacities also need strengthening to achieve a predictable, equitable, and sustainable fiscal system for financing the functions of local government—especially for local service delivery.

Another challenge identified at the conference is for local governments to continue increasing their accountability to the public, making transparency an integral part of their work.  Local government structures must continue and expand their efforts to be socially inclusive, reaching out to citizens from all communities, including the most vulnerable groups in the population.

To help municipalities met these responsibilities, UNDP has strongly and consistently supported greater cooperation among local actors and the creation of partnerships for local development and growth. It is therefore one of the most encouraging findings of the survey that almost two thirds of the country’s municipalities are now actively cooperating to share the costs and burden of local service provision.